Abstract

One of the most important and challenging questions for economists has been how to harmonize economic growth with the natural world. Since the Industrial Revolution, the growth rate of income per capita has been fairly stable in the United States. As shown in Figure 1.1, the measured per capita real GDP in the U.S. has been expanding exponentially, with its growth rate after the mid-19th century being around 2 percent. Figure 1.1 also shows that a number of Asian countries are in the process of catching up to the U.S. income level. Although they differ in the timing of when modern economic growth took off (e.g., Japan’s modern growth started relatively earlier, while China’s rapid growth is a much more recent phenomenon), their growth rates were typically higher than the U.S. after the second half of the 20th century. As long as this trend continues, the per capita income of successful countries will converge to the exponentially expanding U.S. per capita GDP level.